“My sister is a Genome 1 Registered Nurse who was infected by a patient with HCV more than 30 years ago. She is already in mid-stage cirrhosis and, if she lived long enough, her only prospect was a liver transplant using her son as a donor. We are all grateful for Sovaldi, which she starts next week. Although her insurance covers 90%, Gilead will contribute all but the last $20.”

Sovaldi will cure this woman’s hepatitis C and, in doing so, will avoid an expensive and complicated liver transplant for her and a partial liver donation from her son. A “routine” liver transplant where the liver is from a cadaver costs close to $300,000. A “living donor” transplant, such as was planned for this nurse and her son, is even more expensive. Furthermore, in donating about a third of his liver to his mother, the son also has a 3% risk of severe complications from his surgery. This is all avoided thanks to Gilead’s drug, a pill that cures the disease when taken once-a-day over 12 weeks.

Insurance companies, however, have been very vocal in their criticisms of Gilead’s pricing policy. With 3 million people in the U.S. infected with hepatitis C, insurers are claiming that curing this disease in this large a population will bankrupt healthcare systems. Actually, data recently published by the PwC Health Research Institute shows that this might not be the case. In a new study, the authors show that, while the use of Sovaldi and other emerging hepatitis C cures will drive healthcare costs in the short term, this will spike in 2016 and these drugs will actually drive down overall spend on this disease within a decade. Here is their explanation.

“Similarly, costly new cures today could result in long-term savings and improved quality of life. No drug category has gotten more attention in recent months than the new Hepatitis C therapies, which are expected to increase total Hepatitis C drug spending 209% by 2015. Yet long-term savings for treatment of chronic conditions, liver transplants and lost productivity may ultimately offset the cost of specialty drugs. In most serious cases, for example, compare the $270,000 in treatment over a decade for patients with compensated cirrhosis, or scarring of the liver, to the average $86,000 for a course of the new medication, believed to be a cure. The challenge may lie in targeting the patient most in need of the more expensive course of therapy.”

Payers, physicians and patients have all wanted drugs that make a real difference, drugs that provide real VALUE. They are less interested in paying tens of thousands of dollars for a drug that simply extends life by a few months. As companies develop life-saving medications and cures, compounds that truly make a difference, they need to be rewarded with favorable pricing. Without this, the biopharmaceutical industry will continue to contract and fewer such breakthroughs will be discovered.